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The year is 1971 and I’m on board a Greek ship sailing from New York to Israel. The ship’s captain is throwing a dinner party in the ballroom. The mood’s festive and gay. Passengers dance, hold balloons by strings. Israelis and other nationalities hold hands and circle the dance floor. Age 16, I sit on a comfortable armchair and watch the spectacle. Then, the music stops. Dancers stop in mid-step. A woman approaches the stage, taps the microphone a couple of times, casts her hand over her eyes to block the stage lights.

Overlooking Jerusalem

She sings “Jerusalem of Gold:”

The mountain air is clear as wine

And the scent of pines

Is carried on the breeze of twilight

With the sound of bells…..

Jerusalem of gold

And of bronze, and of light

Am I not a violin for all your songs.

When she’s finished, there isn’t a dry eye in the house, including mine. Israelis, Europeans and Americans cheer and clap.

Four years earlier, following the 1967 Six-Day war, Israel, the underdog, wrested East Jerusalem from the Jordanians. Euphoria was at its peak.

Jerusalem Apartment Building

Fast forward more than 40 years, to 2014. Jerusalem is no longer a sleepy town nestled in the Judean Hills. Instead, it’s home to 800,000 residents, 10% of Israel’s total. Its population is double that of Tel Aviv, it’s land area is greater than Paris.

And its challenges are greater than all of Israel’s cities. A Forbes Magazine survey rated Tel Aviv as Israel’s No. 1 city. Jerusalem was not even in the top 10.

Why?

Jerusalem’s population tells the story. Depending on your political persuasion, Israel “annexed” “occupied” “liberated” “united” East Jerusalem in 1967. That came with a price: Arabs and immigration from overseas.

1/3 of Jerusalem’s residents are Arab, mostly all in East Jerusalem. The remaining 2/3 are split evenly between Orthodox Jews, Conservative Jews, and Secular Jews.

Imagine you’re the Mayor of Jerusalem, Israel’s state capital. Given the complexities, try running the city for a day.

Good luck.

Jerusalem apartment interior

My wife Pnina and I are in Jerusalem for a couple of days. We’re staying at a quaint hotel, taking in the sights, enjoying the food and markets. We’re also checking out the real estate.

Jerusalem is not Manhattan, but when it comes to home prices, it might as well be. The prices are closer to God, than to mortals down on earth.

Two women real estate agents greet us at noon. They’ve prepared a list of homes to view. We pile into their car and off we go to Rehavia, the German Colony, Bak’a, Ein Kerem, Katamonim – some of Jerusalem’s choicest areas.

The shock is immediate and painful. Small, cramped apartments in often tired buildings are beyond our pocketbook. The average 100 sq. meters ( 1100 sq. feet) apartment is going for $1,000,000. And it’s not even move-in ready. It’s mostly a shell of a home.

Pnina outside Jerusalem hotel

Here’s of one the real estate agents talking: “The place has great potential. You can knock down this wall here, redo the kitchen there, upgrade the bathroom over there and you’ve got yourself a gem.”

The “For Sale” flyer will show the home as having 4 rooms, but in Israel the living room is counted as one, so is the converted, enclosed balcony, and a small space behind the bathroom, fit more for birds and pigeons….

On to the next home, and the next, and the next. The common denominator is that most apartments are empty.

“Who lives here?” I ask.

Turns out there’s an epidemic of absentee homeowners in Jerusalem. Many of the apartments remain empty 10 months out of the year. Rich Jews from Brooklyn, Paris, London frequent their Jerusalem home-away-from-home once or twice a year, mostly during Passover and Rosh Hashanah. The rest of the time the apartment collects dust.

In highly desirable neighborhoods, it’s not uncommon to see 1/3 of the buildings empty of residents. It’s a ghost town of sorts.

Who’s got a $1,000,000?

Jerusalem Gay Parade

Definitely not your average Joseph or Moshe or Sara. They’re struggling to make a living, barely getting by. They can’t afford half that price. Many are Orthodox Jews and Conservative Jews with extended and expanded families. Gays, squeezed from all sides, choose Tel-Aviv, instead.

That leaves the out-of-town investors from Europe and America to run the show. Supply is low. Demand is high. It’s a market that’s ripe for a price hike. The locals sell out and move. For them, it’s as if they hit the Lotto.

Who’s left in Jerusalem? Mainly it’s the Super rich with their dollars and euros. And the Super poor with their shekels. The secular Jews, the middle-class, college-educated, unable to afford a home, are moving to the suburbs of Tel Aviv, taking with them vitality and know-how that’s deeply needed by an overly Orthodox Jerusalem.

Jerusalem Machne Yehuda Market

And the city is showing its wear and tear. The fabric is becoming undone. I don’t know if the claim is verified, but many say the Arabs (East Jerusalem) and the Orthodox don’t pay their fair share of property tax. They get government exemptions and subsidies for having large families. They don’t pay, or they under-pay. Either way, the neglect in the streets is apparent.

David Ben Gurion, Israel’s founding father, said during Israel’s War of Independence: “Jerusalem can do without Israel but Israel cannot do without Jerusalem.”

It’s the end of the day. The sun glistens on the stone-covered buildings. We say good-bye to the real estate agents and head to Machne Yehuda open-air market. We settle for freshly baked bread, dates, olives, sit down to dinner and order grilled vegetables, wine.

The price? Less than a million.

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Maurice Labi is an Israeli-American who lived in Los Angeles for many years. In 2011 He returned to Northern Israel (Galilee) with his wife and twin teenage daughters. He is of two lands, of two cultures and he blogs about his experiences in Israel, particularly from Galilee where Jews and Arabs dwelled for centuries.

He has also written three novels: “Jupiter’s Stone,” “Into the Night,” and “American Moth” — available at Amazon.com

Not sure how Israel got into such a housing problem. It’s all over the country, not just in Jerusalem. I believe much of it has to do with Israel’s outrageous taxation, governmental land mismanagement, and a labyrinth of red tape which takes up an enormous amount of time before an area is cleared for development.

But Jerusalem is amazing. And a visit to Machne Yehuda without dining at the Azura Restaurant (Google it!) is a miss.